ADB to finance feasibility report


Aug 26 - Sep 01, 2002



The Asian Development Bank (ADB) has expressed its willingness to provide financial support for the study and preparing feasibility report of the $3 billion Turkmenistan-Afghanistan-Pakistan cross border gas pipeline project recently.

This 1500km long pipeline project for transportation of natural gas from Turkmenistan to Pakistan has been a talking point in the energy sector for the last many years. The delayed project mainly due to political disturbances in Afghanistan has already resulted in cost escalation from $2 billion to $3 billion during last 5 years. Earlier a consortium comprised of International oil and gas companies and donor agencies had also agreed to provide project financing, however this important project was shelved due to disturbed conditions in Afghanistan which is the corridor passage for this gas pipeline from Turkmenistan to Pakistan.

This project is getting importance with every passing day in the face of growing demand of natural gas which is relatively cost effective and much cheaper than the conventional fuels used for transportation or power generation sectors.

On one hand, the ever-increasing petroleum prices in the international market impairing the efforts of the manufacturing sector for producing exportable items at competitive price, while on the other hand the domestic consumers are also making hue and cry over exorbitant power tariffs in Pakistan. The adequate availability of the natural gas to replace furnace oil used for power generation is the only way out to cut down the cost of power generation in Pakistan. If this important gas pipeline projects gets materialized, things would certainly improved in a big way to bring down cost of power generation as well as other sectors including transportation cost in Pakistan. There were reports that the ministry of petroleum is determined to achieve the target of shifting from oil to gas within next one year. This precious target however demands for speedy development of local gas fields and their integration with the gas pipeline network for the regular supplies to the relevant consumers.

The ADB is however willing to extend an aid of $1.5 million to the three countries to carry out the study. Pakistan, Afghanistan and Turkmenistan have already signed a memorandum of understanding in Islamabad in May to carry out the study.


Pakistan has a unique geographic and strategic location in Asia. It is situated at the crossroads of West, Central and South Asia and provides access to the warm waters of the Arabian Sea. With the fast growing markets of countries of South Asia and East Asia, the availability and security of energy supplies to these countries is critical for their economic development. Due to its strategic location and the strength of its well-developed energy sector, Pakistan is vying to emerge as a leading transit country in international energy trade in Asia. In this respect, three transmission pipeline projects are under consideration of the government. These projects include Turkmenistan-Afghanistan and Pakistan pipeline, Iran-Pakistan and India pipeline and Qatar-Pakistan pipeline. In addition, a storage and export terminal, combined with export oriented refineries, on Pakistan's Arabian Sea coast at Gwadar can provide a convenient outlet that would be vital for the Central Asian countries if their oil was to find international markets.

It is amazing to note that India was confronted with chronic energy shortage especially the natural gas to overcome its energy problems. As soon as the normalcy returns to the bilateral relations of the two countries, India will be the largest buyer of the natural gas being brought from Turkmenistan.

On the local front, Pakistan has to find a way out for replacement of the costly crude, which alone cost around a billion-dollar per year to the economy every year. The spiraling crude prices have always been grappling with the issue of domestic product prices. These prices have to relate to international prices and as a result, they have been periodically increased. In order to get rid of this problem, Pakistan has not option but to completely switch over from oil to gas in all respective sectors especially the sectors like power generation, transportation and other areas of bulk energy consumption. To encourage use of Compressed Natural Gas (CNG) especially in transport sector conversion of diesel engines of the vehicles into CNG system is gradually increasing in Pakistan. All the major oil market companies have already been engaged in CNG business which, noticeably reflects in the fast emerging CNG filling outlets in all major cities of the country. The multi-facet advantages of the use of CNG in place of oil in the transport sector have their own charm for the managers of the economy.

One of the major incentives in this plan is that the natural gas is 43 per cent cheaper than the fuel oil being used by the bulk consumers such as power generation and transport sectors.